An object is to provide a semiconductor device including a semiconductor element which has favorable characteristics. A manufacturing method of the present invention includes the steps of: forming a first conductive layer which functions as a gate electrode over a substrate; forming a first insulating layer to cover the first conductive layer; forming a semiconductor layer over the first insulating layer so that part of the semiconductor layer overlaps with the first conductive layer; forming a second conductive layer to be electrically connected to the semiconductor layer; forming a second insulating layer to cover the semiconductor layer and the second conductive layer; forming a third conductive layer to be electrically connected to the second conductive layer; performing first heat treatment after forming the semiconductor layer and before forming the second insulating layer; and performing second heat treatment after forming the second insulating layer.